This guide shows you how to form a Pennsylvania nonprofit corporation and apply for tax-exempt status.
Steps to Form a Nonprofit Corporation in Pennsylvania
- Select directors
- Choose a name
- Choose a Pennsylvania registered office
- File Articles of Incorporation with Pennsylvania
- Meet the Pennsylvania publication requirement
- Create corporate bylaws
- Hold an initial organizational meeting of the directors
- Develop a storage method
- Get tax ID numbers
- Apply for all necessary Pennsylvania licenses and permits
- Apply for tax-exempt status
- Register as a charity with the state
- Acquire insurance
Step 1: Select directors
You will need at least one initial director to oversee the registration process and provide necessary documentation and applications for your Pennsylvania nonprofit corporation. They must be of age and not associated with a business that benefits from a relationship with the corporation. Their responsibilities include managing the nonprofit and overseeing its activities. Corporate founders may act as directors. It’s important to choose directors who have sufficient accessibility and free time.
Step 2: Choose a name
Your nonprofit corporation will need an approved name to file the legal registration paperwork to the Pennsylvania Department of State office. There are some rules to ensure your name is approved:
- Be sure the name or one quite similar to it isn’t already in use. Choose another name if your first choice isn’t available.
- The name must include the following words or their abbreviations: “corporation” “company,” “incorporated,” or “limited,” along with “syndicate,” “association,” and “fund.”
- Do not include “limited liability company” in the name.
- The name may include the names of members of the corporation as well as the qualifying word “associates” at the end of the name.
- There are some words and phrases that you cannot use because they’re restricted to specific professions (such as bank, engineer, and accountant).
There are convenient ways to check if your chosen name is allowable. You can send written requests to:
Pennsylvania Department of State
Bureau of Corporations and Charitable Organizations
P.O. Box 8722
Harrisburg, PA 17105-8722
Written requests carry a $15 fee, and you can only request information on three different names. If you want to reserve your name fill out this form and pay the $70 fee. Your name will be reserved for 120 days, after which you’ll need to apply for it again.
Domain names that use or complement your corporation’s name can be reserved, as well. ZenBusiness offers a service that helps find and register domain names.
Step 3: Choose a Pennsylvania registered office
While some states require nonprofit corporations to have a registered agent, Pennsylvania requires a registered office. The purpose of the registered office is to receive legal documents for the organization.
Documents are served to the registered office’s physical address that is filed with the documents for Articles of Incorporation (see below.) Report any changes in the registered office address to the Department of State. If your corporation doesn’t have a physical address, or you prefer not to have legal documents sent there, there are commercial registered office providers. You may not receive legal documents via a post office box. It’s easy to find a commercial registered office provider with ZenBusiness!
Step 4: File Articles of Incorporation with Pennsylvania
File a nonprofit Articles of Incorporation form with the Pennsylvania Department of State’s Bureau of Corporations and Charitable Organizations. The submission costs $125. Go to the Keystone Login website to submit articles online. Businesses owned by veterans or reservists do not need to pay a fee. The Articles of Incorporation include:
- The corporation’s legal name
- The registered office’s address
- Incorporators’ names and addresses
- The effective date
- Incorporators’ signatures
- Any additional provisions
New nonprofit corporations must also file a docketing statement with the Articles of Incorporation. The statement includes:
- The entity name
- The person(s) responsible for taxes
- Description of the organization’s activities
- The Employer Identification Number (EIN)
- The corporation’s tax or fiscal year end month
Step 5: Meet the Pennsylvania publication requirement
Pennsylvania requires that you publish a statement that you intend to file Articles of Incorporation in two general newspapers, one a legal publication if possible. Submit proof of publication with the corporation’s meeting minutes. The newspaper submissions must state that incorporation is planned or completed under the Nonprofit Law of 1988.
Step 6: Create corporate bylaws
Bylaws for nonprofit organizations form a foundation for the group’s mission, structure, activities, finances, and goals. They function like an owner’s manual for corporations. Established at the start-up, the bylaws dictate how an organization is managed. Duties and responsibilities along with income and expense reconciliation processes are suggested items.
Keep in mind that the bylaws are not just internal guidelines; they have legal implications if they’re not followed. Therefore, it’s best if you engage a lawyer familiar with nonprofit corporations to ensure the bylaws follow all statutes and regulations.
The best bylaws provide transparency and accountability when made available to interested parties, with annual reviews and updates. Tailor them to match your corporation’s goals and capabilities, and be realistic in terms of what they govern.
Step 7: Hold an initial organizational meeting of the directors
Nonprofit corporation directors meet at least once per year. The timing and frequency of any additional meetings are decided during the bylaws’ creation. The initial meeting lays the groundwork for future meetings, including the agenda’s structure. Other topics may include how minutes are recorded and distributed to directors and other designated parties.
It’s during this meeting that new directors get a sense of how well the organization is doing, through financial and old-business reports. Agendas may include the following:
- A list of attendees
- Welcomes and introductions
- Acceptance of bylaws
- Treasurer’s report: Income, expenses, itemized balance sheet
- Report of old business: status of legal filings, tax-exempt status, and so on
- New business
- Next meeting date, time, and location
Step 8: Develop a storage method
Retaining documents is essential, and there isn’t one specific way to organize and store them. A records binder holds meeting minutes, financial reports, legal documents, and other material supporting the nonprofit’s work.
The cloud is an efficient and easily accessible location for storage. Digital documents, proceedings, and scanned paper copies are efficiently stored on a shared corporate drive in the cloud.
Step 9: Get tax ID numbers
Tax-exempt organizations must nonetheless file taxes, and for that, they need an Employer Identification Number (EIN). There are three steps to acquire an EIN online:
1. Determine whether your corporation is eligible using these criteria:
- Your corporation resides in the U.S. or its territories.
- The person applying has a valid taxpayer identification number, a Social Security number, an Individual Taxpayer Identification Number (ITIN), or an EIN.
2. Read and understand the online application.
3. Submit the application to the IRS.
Your EIN arrives after the IRS validates it. You can also use the ZenBusiness EIN service to do the work for you.
Step 10: Apply for all necessary Pennsylvania licenses and permits
You are responsible for acquiring any licenses or permits your nonprofit corporation needs. There is no central agency for all permits and licenses because licensing can be at federal, state, or local levels. Some are specific to certain types of nonprofit corporations.
To make things easier and less stressful, use the ZenBusiness business license report service.
Step 11: Apply for tax-exempt status (both federal and state)
Some tasks to accomplish before applying for tax-exempt status:
- Determine if your corporation qualifies. Typically, nonprofit corporations that exist for religious, charitable, or other specific purposes meet the requirements for an IRS tax exemption.
- Gather required organization documents such as Articles of Incorporation.
- Other information is available on the commonwealth’s nonprofit page at the IRS. Also have your organization’s EIN available.
- Complete IRS Forms 1023 EZ or 1023 501(c)3
Once you have your federal tax exemption status, you are automatically tax-exempt for Pennsylvania. Contact the Pennsylvania Revenue Service for additional information.
Step 12: Register as a charity with the state
Pennsylvania’s Bureau of Corporations and Charitable Organizations registers charities and maintains legal records on registered charitable organizations through the state’s charitable solicitation law. Form BCO-10 (Charitable Organization Registration Statement) is the vehicle by which a charity registers with the state.
Step 13: Acquire insurance
It’s wise to find an insurance agent familiar with nonprofit corporations to assist in determining which types of insurance you need. You’ll need worker’s compensation insurance if you have on-site employees. You may also need unemployment insurance and general business insurance.
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Pennsylvania Nonprofit FAQ
- Can a founder of a nonprofit receive a salary?
If a founder acts in the role of an employee, such as CEO, a salary is appropriate as compensation for running the corporation. Salaries come out of gross revenues.
- How much does it cost to start a nonprofit corporation in Pennsylvania?
The basic cost of starting a nonprofit corporation is $125, the cost for filing the Articles of Incorporation. Other potential fees include costs of services such as ancillary transactions, mergers and consolidations, and others. Check with the Bureau of Corporations and Charitable Organizations for more information.
- What happens if a nonprofit makes money?
Profits are reinvested back into the organization.
- What kinds of businesses can be nonprofit?
Many types of businesses can be nonprofit in Pennsylvania. Organizations that are run for religious, scientific, charitable, or similar categories qualify. This can include public charities and private foundations, social welfare organizations, business leagues, and social/recreational clubs.
- Can nonprofits sell products?
Nonprofits can sell products for raising funds related to their purpose. For example, Girl Scouts sell cookies, and high school teams sell a variety of fan items. These are only two examples of product fundraisers. Any income received from fundraising goes toward the purpose of the nonprofit.
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